1. Compute taxable income for Year 1.

The company XYZ began operations at the beginning of Year 1. The pretax income for Year 1 is $121,000. The pretax income was after charging depreciation of property, plant, and equipment for financial reporting purposes of $11,000. Property, plant and equipment is depreciated for tax purposes at rate of 25%. During the year the company purchased the following assets: • Equipment $48,000 • Machinery 12,000 The tax rate enacted for Year 1 and future years is 30%. 1. Compute taxable income for Year 1. 2. Compute the amount of deferred tax to appear on the statement of financial position of the company at December 31 Year 1. 3. Prepare the journal entry to record income tax expense, deferred taxes, and income tax payable for Year 1. 4. Show the movement in the deferred tax liability account.